Assume that The AM Bakery is preparing a budget for the month ending December 31. Management prepares the budget for the month ending December 31 by starting with the actual results for August that is shown below. Then, management considers what the differences in costs will be between August and December. THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending August 31 Actual Ingredients Flour Butter Oil Fruit Nuts Other $ 3,955 3,555 1,755 1,355 955 Chocolate Total ingredients 855 455 $ 12,885 Labor Channel manager $ 5,050 Other Utilities Rent Marketing Total bakery costs Revenues $ 35,330 52,750 10,755 2, 620 3,820 200 Management expects revenue to be 100 percent greater in December than In August because of the holiday season. Management expects that all food costs (e.g., flour, butter, and so on) will be 120 percent higher In December than In August because of the Increase In sales and because prices for ingredients are generally higher in the high demand holiday months. Management expects "other" labor costs to be 130 percent higher in December than in August, partly because more labor will be required In December and partly because employees will get a pay raise. The manager will get a pay raise that will increase his salary from $5,050 in April to $6,100 in December. Utilities will be 15 percent higher In December than in August. Rent and marketing will be the same In December as in August. Now, move ahead to January of the following year and assume the following actual results occurred in December: Required: a. Prepare a statement that compares the budgeted and actual costs. (Negative amounts should be indicated by a minus sign.) THE AM BAKERY Bakery sales Actual and Budgeted Costs For the Month Ending December 31 Actual Budgeted Difference Ingredients Flour $ 8,575 Butter 7,790 Oil 3,959 Fruit 3,137 Nuts 2,232 Chocolate 1,710 Other 960 Total ingredients $ 28,363 $ 0 Labor Channel manager $ 6,100 Other 24,511 Utilities 3,770 Rent 3,820 Marketing 221 Total bakery costs Revenues $ 66,785 104,025 b. Suppose that you have limited time to determine why actual costs are not the same as budgeted costs. Which three cost Items would you Investigate to see why actual and budgeted costs are different? Flour, chocolate and other labor O Nuts, chocolate and butter Utilities, other labor and chocolate